Tariffs, Treasury Yields, and The IOS Landscape

TARIFFS
Escalation of US - China Tariffs

In a move that has intensified the ongoing trade war, the US government announced an increase in tariffs on Chinese imports to an effective rate of 145%. This hike includes a newly imposed 125% duty combined with an existing 20% tariff related to other trade concerns. In retaliation, China raised its tariffs on U.S. goods from 84% to 125%, effective April 12, 2025.

Implications for IOS and CRE

The combination of elevated tariffs and macroeconomic uncertainty is putting pressure on logistics networks and real estate decisions. But within that pressure lies potential opportunity—especially for industrial outdoor storage and well-located industrial real estate. Here's how it's playing out:

📦 Supply Chain Disruptions:
With goods from China now significantly more expensive, many U.S. companies are rethinking their sourcing and logistics strategies. Some are importing larger quantities upfront to beat additional tariff hikes, which increases short-term demand for storage space—especially flexible, and less expensive spaces like IOS yards.

🏗️ Higher Development and Operational Costs:
Construction materials (steel, concrete, prefab office units) and infrastructure inputs are subject to the same tariffs and cost pressures. That’s putting a strain on new development economics across industrial real estate—including building, paving and upgrading industrial and IOS sites.

🌍 Tenant Demand Shifting Due to Onshoring & Foreign Investment:
This may possibly be the most important trend to watch. As tariffs make offshore manufacturing and long-distance shipping more expensive, onshoring and nearshoring are back in focus. Several key developments are driving tenant demand:

• Foreign companies expanding operations in the U.S. to avoid tariff exposure. These firms—especially in automotive and building materials—need logistics space, fleet storage, and temporary yards near ports and manufacturing hubs.

• U.S. manufacturers reshoring supply chains, increasing their use of IOS for staging raw materials or storing finished goods before distribution.

• Large importers securing outdoor laydown yards near ports and rail to build resilience into their logistics network—creating more demand in markets like Savannah, Houston, L.A., and New Jersey.

📍 Premium on Proximity:
As transportation costs rise, IOS sites near intermodal hubs, ports, and dense urban distribution nodes could become even more valuable. The ability to secure entitled land that allows outdoor use continues to be a key competitive advantage.

VOLATILITY IN TREASURY YIELDS
10-Year Treasury Yields and Interest Rates

The bond market has experienced notable volatility in response to the escalating trade tensions. The 10-year Treasury yield, a benchmark for long-term interest rates, has seen significant fluctuations. For instance, it surged to 4.5% by April 9, 2025, reflecting investor concerns over inflation and stability.

Impact on CRE Financing

• Borrowing Costs: Fluctuations in Treasury yields directly influence borrowing costs for commercial real estate. An increase in yields typically leads to higher interest rates on commercial loans, making financing more expensive for new developments and acquisitions.​
  

• Investment Decisions: Rising borrowing costs may cause investors to reassess the viability of potential projects, potentially leading to delays or cancellations of planned developments or acquisitions.

A Few Things IOS Owners and Operators Might Want to Keep an Eye On

With all the noise around tariffs, rate swings, and general market uncertainty, it could be worth thinking through how IOS investment strategy lines up with today’s environment. A few things to consider:

• Looking at tenant mix
  If most of the tenants in a portfolio are clustered in one industry, it might be worth thinking about how a little diversification could help hedge against volatility. Different sectors move at different speeds—and having a mix might keep things steadier when markets shift.
  

• Making sites more adaptable
  We’re seeing more tenants interested in yards they can use for shorter-term or more flexible needs. If your site already has good bones (paving, fencing, utilities), maybe there’s an opportunity to position it that way. Even smaller improvements could open doors to new tenant types.
  

• Paying attention to rate movement
  Treasury yields have been moving around, and that tends to ripple into cap rates, loan terms, and valuations. And with borrowing costs in flux, it could make sense to explore ways to maximize stability or at least look at different types of financing options available.
  

FINAL THOUGHTS
Conclusion

Tariffs, Treasury yields, supply chain curveballs—none of it’s simple right now. But if there’s one thing IOS YardDogs know how to do, it’s stay flexible. The more we understand how these shifts play out, the better positioned we are to spot opportunities (or at least avoid headaches).

We’ll keep tracking what’s happening and sharing what we’re seeing in future editions. In the meantime, if you’ve noticed any trends in your market—or made changes to how you’re operating—we’d love to hear about it just shoot us a note at [email protected]!

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